GST voluntary compliance program research - Phase 3 2013

Overview

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End of attention

In 2011, we commissioned independent research company, TNS Social Research, to undertake a major program of research to understand the attitudes and behaviours driving compliance (or non-compliance) with GST obligations. For 2013, the focus continued to examine the GST compliance behaviour among micro and small-to-medium businesses, tax agents and business activity statement (BAS) agents.

The research supports the GST voluntary compliance program, announced in the 2010-11 Federal Budget, to deter fraud and evasion, and help people understand the heightened risks which accompany deliberate non-compliance. In 2012, the program was extended for a further two years.

TNS undertook phase three (2013) research focusing on two components:

Qualitative research with business to test communication concepts and material

Quantitative telephone surveys with business, and tax and BAS agents to track the change in beliefs, attitudes and behaviours against the benchmarks established in 2011.

Key insights from the research

The 2013 research suggests attitudes towards the GST system and GST tax morale remains strong. Key business findings from this research include:

The majority of businesses continue to be confident about meeting their GST obligations and believe they do so successfully.

The strengthening in the perceived fairness, morality and legitimacy of the GST system with businesses who believe the GST is a fair tax rising from 58% in 2012 to 65% in 2013. This suggests a high level of moral engagement across businesses and recognition of the benefits of GST compliance.

Business engagement in GST minimisation approaches remains extremely low. In comparison to 2012, a significant decrease was seen in the incidence of under-reporting, claiming incorrect GST credits, using multiple business structures and looking for grey areas to minimise GST.

Businesses are finding it challenging with their recording and reporting GST obligations, particularly around the certainty and surety of data. Concurrently, tax and BAS agents continue to recognise the high incidence of unintentional errors in client record-keeping (76%), with a comparatively lower level of intentional errors reported (12%).

A range of factors influence the businesses propensity to comply with their GST obligations. Some key drivers of GST compliance compared to our previous research include:

a significant increase in the strength of belief in the morality and legitimacy of the GST since the 2011 baseline

perceived administrative benefit of GST has strengthened from 2011 and 2012

most businesses are not financially motivated towards deliberate non-compliance

perceptions of ease of performing key tasks related to GST compliance are strengthening although overall efficacy has not increased.

Deliberate non-compliance with GST requirements remains relatively uncommon. Some drivers of business non-compliance for 2013 include:

the perceived burden of GST compliance

limited self-efficacy and confidence regarding their obligations

the standard perspective towards the recording of cash transactions

inefficiencies in their business systems and processes to keep up with the administrative requirements.

Key tax and BAS agent findings

Tax and BAS agents continue to be relied primarily on as the most common source of GST related information (increasing significantly from 65% in 2012 to 73% in 2013)

Overall, there was an increase in the viewed reliance by businesses from 2012, with 55% of BAS agents and 21% of tax agents believing their clients pass on their GST responsibility completely to them.

Tax agents continued to report that their clients relied on them for all their tax related and business advisory needs.

There was an increase of businesses (from 60% in 2011 to 81% in 2013) using BAS agents for 'full service' BAS preparation and lodgment.

How the research is being used

Findings from phase three of the research are being used to guide and inform our future communication activities to support the GST voluntary compliance program.

For example, the research has assisted in the development of a number of communication products, including an additional two GST videos. The research enabled us to appropriately modify the tone and messaging to create more useable and relevant products to assist small business people.

We are conducting a range of strategies and activities, which are either underway or part of our ongoing compliance strategies that seek to deal with issues covered in the findings and observations from the research. For example, we are implementing initiatives in relation to registration, on-time lodgment, correct reporting and payment of GST obligations.

This research has given us an insight into the attitudinal, perceptual and behavioural changes of businesses, tax and BAS agents towards the GST system. This has enabled us to track and evaluate our compliance effectiveness measures and the progress of the program against the benchmarks established in 2011.

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